Energy Business Lawhttp://www.energybusinesslaw.com
Insights for the Global Energy IndustryFri, 08 Dec 2017 16:04:07 +0000en-UShourly1https://wordpress.org/?v=4.7.8Subscribe with My Yahoo!Subscribe with NewsGatorSubscribe with My AOLSubscribe with BloglinesSubscribe with NetvibesSubscribe with GoogleSubscribe with PageflakesSubscribe with PlusmoSubscribe with The Free DictionarySubscribe with Bitty BrowserSubscribe with Live.comSubscribe with Excite MIXSubscribe with WebwagSubscribe with Podcast ReadySubscribe with WikioSubscribe with Daily RotationThe Senate’s New Base Erosion Tax: Highlights for Renewable Energyhttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/yDtjxjwD-aY/
http://www.energybusinesslaw.com/2017/12/articles/renewables/the-senates-new-base-erosion-tax-highlights-for-renewable-energy/#respondFri, 08 Dec 2017 15:51:39 +0000https://www.energybusinesslaw.com/?p=1616Continue Reading]]>On December 2, 2017, the Senate approved its version of the Tax Cuts and Jobs Act. The Senate Bill includes the base erosion and anti-abuse tax, a new tax intended to apply to companies that significantly reduce their US tax liability by making cross-border payments to affiliates. Given its potential to disrupt the financing of renewable energy projects, taxpayers in the renewable energy sector have been paying close attention to its developments.

]]>http://www.energybusinesslaw.com/2017/12/articles/renewables/the-senates-new-base-erosion-tax-highlights-for-renewable-energy/feed/0http://www.energybusinesslaw.com/2017/12/articles/renewables/the-senates-new-base-erosion-tax-highlights-for-renewable-energy/Initial Republican Tax Reform Proposal Includes Tax Cuts and Changes to Energy Creditshttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/gCYpW_Bhh1g/
http://www.energybusinesslaw.com/2017/11/articles/power-markets/initial-republican-tax-reform-proposal-includes-tax-cuts-and-changes-to-energy-credits/#respondFri, 03 Nov 2017 20:31:39 +0000https://www.energybusinesslaw.com/?p=1607Continue Reading]]>Changes to the energy credits proposed in the Tax Cuts and Jobs Act could impact the eligibility of renewable energy projects that had been relying on the guidance previously issued by the Internal Revenue Service.

]]>http://www.energybusinesslaw.com/2017/11/articles/power-markets/initial-republican-tax-reform-proposal-includes-tax-cuts-and-changes-to-energy-credits/feed/0http://www.energybusinesslaw.com/2017/11/articles/power-markets/initial-republican-tax-reform-proposal-includes-tax-cuts-and-changes-to-energy-credits/International Trade Commission Issues Recommendations for Tariffs on Imported Solar PV Equipmenthttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/9mmtgQSZF2c/
http://www.energybusinesslaw.com/2017/11/articles/tax/international-trade-commission-issues-recommendations-for-tariffs-on-imported-solar-pv-equipment/#respondFri, 03 Nov 2017 19:16:02 +0000https://www.energybusinesslaw.com/?p=1609Continue Reading]]>On October 31, 2017, the US International Trade Commission (ITC) released its recommendations to impose a tariff on imported solar equipment. The proposals it issued, however, would result in duties substantially lower than those sought by the petitioners. The ITC’s four commissioners issued several remedy recommendations, including, at the high end, a 35 percent tariff on imported solar modules and a 30 percent tariff on solar cells. This would result in an estimated 10-13 cent per watt increase on imported solar panels, far below the tariff levels requested by the petitioners.

In May, Suniva, a US solar cell manufacturer, filed a petition at the ITC requesting relief from foreign imports. The petition alleged that a global imbalance in supply and demand in solar cells and modules and a surge of cheap imports caused serious injury to the domestic solar manufacturing industry. SolarWorld, another US manufacturer, joined the petition and the ITC instituted an investigation. Suniva and SolarWorld requested a 32 cent per watt tariff on crystalline silicon photovoltaic (CSPV) cells, and Suniva sought a price floor on solar panels of 74 cents per watt.

While US solar manufacturers argued in favor of imposing duties on foreign imports, others like the Solar Energy Industries Association (SEIA) have opposed the petition, arguing that it poses a major threat to the 260,000 US workers in the solar industry. Specifically, SEIA argues, the higher cost of panels would lead to decreased demand and make solar energy less competitive in the United States, costing jobs in solar installation and other areas of the solar industry. Solar manufacturing accounts for approximately 38,000 jobs in the United States while solar installation accounts for over 137,000 jobs.

In September, the ITC found injury to the US solar equipment manufacturing industry. Since that finding, the ITC has been working on the remedy phase of the proceeding.

The commissioners issued three separate sets of recommendations. One recommendation proposes, among other things, imposing tariffs of up to 30 percent on imported CSPV cells and a 35 percent tariff on imported CSPV modules, each of which would be incrementally reduced over four years. A second proposal recommended imposing a 30 percent tariff rate on imports of cells exceeding 1 gigawatt, decreasing by five percentage points and increasing the in-quota amount increase by 0.2 gigawatts each year over a four year period, as well as a 30 percent tariff on modules that would be phased down by five percentage points each year. The third proposal recommended a quantitative restriction on cells and modules starting at 8.9 gigawatts in the first year, increasing by 1.4 gigawatts each subsequent year.

The ITC will forward its report, which contains its injury determination, remedy recommendations, additional findings, and the bases for each, to the President by November 13, 2017. The President must make a final decision on whether to impose a remedy and what that remedy should be by January 12, 2018.

]]>http://www.energybusinesslaw.com/2017/11/articles/tax/international-trade-commission-issues-recommendations-for-tariffs-on-imported-solar-pv-equipment/feed/0http://www.energybusinesslaw.com/2017/11/articles/tax/international-trade-commission-issues-recommendations-for-tariffs-on-imported-solar-pv-equipment/Illinois Renewable Resources Procurement Plan Aims to Boost Renewable Energy Developmenthttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/IZDytmrwAec/
http://www.energybusinesslaw.com/2017/10/articles/project-development-and-finance/illinois-renewable-resources-procurement-plan-aims-to-boost-renewable-energy-development/#respondFri, 27 Oct 2017 15:15:10 +0000http://www.energybusinesslaw.com/?p=1591Continue Reading]]>On September 29, 2017, the Illinois Power Agency (IPA) released its Long-Term Renewable Resources Procurement Plan (Plan) to implement renewable energy goals set forth in Illinois’s Future Energy Jobs Act, which went into effect on June 1. Together, the new legislation and the Plan, among other things, make significant modifications to Illinois’s renewable portfolio standard (RPS) goal of 25 percent of retail electricity sales sourced from renewable energy by 2025. The Plan sets forth procurement programs designed to meet the state’s annual RPS targets until 2030 and will be updated at least every two years. These changes significantly expand renewable energy development opportunities in Illinois—by some estimates, leading to the addition of approximately 1,300 megawatts (MW) of new wind and nearly 3,000 MW of new solar capacity by 2030.

Expanding the Illinois RPS

While maintaining the same 25 percent renewable energy sourcing goal, the Future Energy Jobs Act functionally increases the state’s RPS target because Illinois’s RPS standard previously applied only to customers buying power through a utility’s default service, not customers taking supply through alternative retail suppliers or through hourly pricing. According to the IPA, in recent years, only 30-50 percent of potentially eligible retail customer load actually received default supply services, while competitive class customers (including larger commercial and industrial customers, which represent approximately half of total load) had no default supply option. Given this transition, meeting Illinois’s RPS goal of 13 percent of retail electric sales in the state sourced from renewable energy for the 2017–2018 delivery year will require the IPA to procure on behalf of the state’s electric utilities an additional 7.5 million renewable energy credits (RECs), which will gradually increase to a forecasted procurement of 31.5 million RECs for the 2030–2031 delivery year. One REC represents 1 megawatt hour (MWh) of generation produced by an “eligible renewable resource.” Eligible resources include wind, solar, thermal energy, biodiesel, anaerobic digestion, biomass, tree waste, landfill gas and some hydropower. Many other states, including California and Massachusetts, utilize RECs to demonstrate compliance with the state’s RPS program.

The Future Energy Jobs Act includes quantitative targets for the procurement of specific types of RECs to satisfy the state’s RPS program. By the end of the 2020 delivery year (May 31, 2021), at least 2 million RECs must come from new wind projects and at least 2 million RECs must come from new solar projects. These targets increase to 3 million apiece by the end of the 2025 delivery year (May 31, 2026) and 4 million apiece by the end of the 2030 delivery year (May 31, 2031). Solar projects must be energized after June 1, 2017, to produce RECs to meet these targets. The IPA will be responsible for procuring RECs and will allocate the procurement costs to each of Illinois’s three utilities based on the utilities’ forecasted delivery volumes of electricity.

For new solar projects, at least half (e.g., one million RECs per year by the end of the 2020 delivery year) must come from distributed generation and community solar, at least 40 percent must come from utility-scale solar projects with at least 2 MW of capacity, at least 2 percent must come from non-community solar brownfield projects, and the remaining 8 percent will be allocated according to the IPA’s discretion.

Distributed and Community Solar Procurement

New distributed generation and community solar projects will be procured using the Adjustable Block Program. This program sets an administratively determined price, adjusted in volumetric blocks, where a party seeking a REC contract knows the REC price in advance and has visibility into when and how that price may change. The block program’s procurement of RECs is allocated by statute as 25 percent for distributed generation projects with a nameplate capacity of 10 kilowatts (kW) or less (e.g., residential solar), 25 percent for distributed generation projects with a nameplate capacity between 10 and 2,000 kW (e.g., residential and commercial-scale solar), 25 percent for community solar projects, and 25 percent left to the IPA’s discretion, currently proposed to be allocated evenly between the three former categories. The blocks within the Adjustable Block Program are also divided by utility service territory.

When a block’s capacity is filled, the next block will open at a new price, expected to be 4 percent less than the previous block. A solar project will receive the price of the block that is open at the time the project’s application is submitted. The IPA’s initial calculations of REC prices under the Adjustable Block Program are as follows:

The IPA warns that these initial prices are likely to change in the final version of its Plan. The IPA also has the authority to periodically review the amount of generation capacity available in each block and the purchase price for each block. The IPA estimates that meeting its 2020 delivery year goals will require approximately 666 MW of new solar generation capacity under the block program, which will be divided evenly among the blocks, according to the current proposal.

Contracts entered into through the Adjustable Block Program must be for a minimum of 15 years of REC deliveries. Payment for RECs will be made by the applicable electric utility, and the seller will deliver RECs to that utility. For distributed generation systems below 10 kW, the REC purchase price will be prepaid in full by the contracting utility when the facility is interconnected and energized. For larger distributed generation systems and community solar projects, 20 percent of the REC purchase price will be paid up front, and the remaining portion will be paid over the following four years.

Wind and Utility-Scale Solar Procurement

Wind and utility-scale and brownfield solar projects will be subject to a competitive procurement process. The IPA is in the process of conducting an initial forward procurement seeking 15 year REC delivery contracts for both wind and solar projects that will begin between June 1, 2019, and June 1, 2021. The IPA has already procured 1 million annual RECs from new wind projects and 200,000 annual RECs from new solar projects. The agency is planning additional rounds of the initial procurement to purchase another 800,000 RECs from utility-scale and brownfield site solar projects. These procurements will be concluded by May 31, 2018.

The IPA will conduct subsequent forward procurements seeking 15-year fixed price REC sales contracts. It will also use spot procurements to purchase RECs using single year contracts. Similar to past practices, the IPA will conduct competitive procurements based on price offers and locational priorities. The Future Energy Jobs Act, however, requires competitively procured RECs to meet certain public interest criteria that make it more difficult for generation resources located outside of Illinois to participate. The new legislation effectively eliminates the possibility that projects in states beyond those adjacent to Illinois could participate in Illinois’s RPS program.

The Plan also includes the Illinois Solar for All Program, which provides incentives for low-income participation in solar projects, either as the system owner, a community solar subscriber or as a system host.

Next Steps

The comment period on the IPA’s Plan ends November 13th. The IPA then has until December 4th to revise the Plan and file it with the Illinois Commerce Commission (ICC) for approval. The ICC must approve or modify the Plan by April 3, 2018, at which point the programs will be put fully into effect. If the current Plan is put into effect, Illinois stands to add a significant amount of renewable generation in the upcoming years.

]]>http://www.energybusinesslaw.com/2017/10/articles/project-development-and-finance/illinois-renewable-resources-procurement-plan-aims-to-boost-renewable-energy-development/feed/0http://www.energybusinesslaw.com/2017/10/articles/project-development-and-finance/illinois-renewable-resources-procurement-plan-aims-to-boost-renewable-energy-development/Department of Energy Proposes Rule Benefiting Coal and Nuclear to FERChttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/6W8a3e1ZUFA/
http://www.energybusinesslaw.com/2017/10/articles/ferc/department-of-energy-proposes-rule-benefiting-coal-and-nuclear-to-ferc/#respondTue, 03 Oct 2017 19:24:15 +0000http://www.energybusinesslaw.com/?p=1588Continue Reading]]>On September 28, 2017, the US Department of Energy (DOE) submitted a proposed rule to the Federal Energy Regulatory Commission (FERC) that, if implemented, could reshape organized wholesale electricity markets. Citing electric grid reliability and resiliency issues like the 2014 Polar Vortex and recent hurricanes, DOE asked FERC to enact a new compensation system for coal and nuclear power plants—dubbed “fuel-secure resources” by DOE. Coal and nuclear plants have been retiring prematurely and, according to DOE, the retirements are “threatening the resilience of the Nation’s electricity system.”

In order to stem the tide of retirements, DOE submitted to FERC a proposed rule requiring organized wholesale electricity markets run by independent system operators (ISOs) or regional transmission organizations (RTOs) to develop and implement market rules that “accurately price generation resources necessary to maintain the reliability and resiliency” of the bulk power system. The proposed rule would require ISOs and RTOs to provide “a just and reasonable rate” for the purchase of electricity from a fuel-secure resource and “recovery of costs and a return on equity for such resource.” Eligible resources must (i) be located within an ISO or RTO, (ii) be able to provide energy and ancillary services, (iii) have a 90-day fuel supply on site, (iv) be compliant with all environmental laws, and (v) not be subject to cost-of-service rate regulation at the state or local level. Practically, these requirements limit participation to coal and nuclear plants.

Although DOE’s proposal leaves the details open, it appears to contemplate a return to some form of cost-of-service ratemaking for coal and nuclear plants and away from purely market-based compensation.

DOE required FERC to act on the proposal within 60 days of publication in the Federal Register. DOE also urged FERC to issue the rule as an interim final rule that will become effective immediately. DOE submitted its proposal under Section 403 of the Department of Energy Organization Act, which authorizes the Secretary of Energy to propose rules but gives FERC exclusive jurisdiction over such proposals.

Comments on DOE’s proposal are due to FERC by October 23, 2017. Reply comments are due by November 7, 2017.

]]>http://www.energybusinesslaw.com/2017/10/articles/ferc/department-of-energy-proposes-rule-benefiting-coal-and-nuclear-to-ferc/feed/0http://www.energybusinesslaw.com/2017/10/articles/ferc/department-of-energy-proposes-rule-benefiting-coal-and-nuclear-to-ferc/DOE Says Wind Power Creates Lots of Jobs!http://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/QFKY4QObGh8/
http://www.energybusinesslaw.com/2017/08/articles/renewables/doe-says-wind-power-creates-lots-of-jobs/#respondThu, 10 Aug 2017 16:51:31 +0000http://www.energybusinesslaw.com/?p=1586Continue Reading]]>According to the Department of Energy (DOE) renewable energy wind installations had explosive growth through 2016, and added approximately 32,000 jobs since 2015, to a total of 102,000!

In the Wind Technologies Market Report, DOE says the Production Tax Credit (PTC) is directly responsible for the expansion. Congress, however, is phasing out the PTC, which DOE believes will lead to a slowing of the wind energy industry. The PTC is incrementally being phased out over a five year period, and ends completely in 2020. Read here for more information.

]]>http://www.energybusinesslaw.com/2017/08/articles/renewables/doe-says-wind-power-creates-lots-of-jobs/feed/0http://www.energybusinesslaw.com/2017/08/articles/renewables/doe-says-wind-power-creates-lots-of-jobs/IRS Rules (Again) That Taxpayers Are Not Entitled to Claimed Refined Coal Creditshttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/PUhJNnKpmG8/
http://www.energybusinesslaw.com/2017/07/articles/renewables/irs-rules-again-that-taxpayers-are-not-entitled-to-claimed-refined-coal-credits/#respondFri, 28 Jul 2017 16:09:00 +0000http://www.energybusinesslaw.com/?p=1584Continue Reading]]>In a highly-anticipated Technical Advice Memorandum (TAM) dated March 23, 2017 and released on July 21, 2017, the Internal Revenue Service (IRS) ruled that two taxpayers who had invested in a Limited Liability Company that owned and operated a refined coal facility (the LLC) were not entitled to refined coal production credits they had claimed because their investment in the LLC was structured “solely to facilitate the prohibited purchase of refined coal tax credits.” This analysis marks a departure from the position staked out by the IRS in a number of recent refined coal credit cases, which focused on whether taxpayers claiming refined coal credits were partners in a partnership that owned and operated a refined coal facility.

Congress enacted the refined coal production tax credit under Internal Revenue Code (IRC) section 45(c)(7) and (e)(8) to encourage investment in the development of refined coal facilities and the use of refined coal, which would otherwise be unprofitable. In the current technological and regulatory environment, it is generally not possible to produce and sell refined coal at an economic (i.e., pre-tax) profit. Having determined that the burning of refined coal by coal-fired utilities would be beneficial, and recognizing these economic facts, Congress enacted the refined coal production credit. To advance Congress’s intent, the Obama Administration promoted investment by non-traditional energy investors using “tax equity structures.” Indeed, the Department of Energy endorsed the use of tax equity structures to raise capital from investors for clean energy projects. See, e.g., White House Tax Equity Seminar: Maximizing Incentives from Renewable Generation: Best Practices and Financial Opportunities from Renewable Energy Tax Credits (Mar. 13, 2012). Through these actions, the government has attempted to create a refined coal industry, using the tax credit to incentivize investments in clean energy that otherwise would never have been made.

Under IRC section 45, a taxpayer must satisfy four requirements to qualify for the refined coal production tax credit: (1) refined coal must be produced by the taxpayer from feedstock coal; (2) the refined coal must be sold to an unrelated person with the reasonable expectation that it will be burned to produce steam; (3) refined coal must produce a 20 percent reduction of NOx and a 40 percent reduction of mercury or sulfur dioxide; and (4) the refined coal facility must have been placed in service before January 1, 2012. In general, the IRS has not challenged taxpayers’ compliance with these conditions. Instead, typically the IRS has challenged claimed refined coal credits on substance-based arguments relating to the structures by which investors invest in refined coal facilities.

In the TAM, the IRS approached the issue from the perspective of the Third Circuit’s opinion in Historic Boardwalk. In that case, according to the IRS, claimed IRC section 47 rehabilitation credits were denied on the ground that the investments of the taxpayers claiming the credits were structured in such a way that they had no “meaningful financial stake in the success or failure of the activity apart from the tax benefits.” Analyzing the various agreements governing the LLC’s operation of the refined coal facility in question and the taxpayers’ investments in the LLC, the IRS found that there was only a “limited likelihood of any meaningful variation in financial return from the underlying coal refining activity.” This, according to the IRS, was fatal to any claim by the taxpayers to refined coal credits related to the LLC’s production of refined coal.

The IRS acknowledged that “our conclusion in this case may seem at odds with the fact that the activity that Congress intended to incentivize did take place, as refined coal was produced.” However, noting the “totality of facts and circumstances,” the IRS found that the taxpayers in question “did not participate directly or indirectly in the production and sale of refined coal,” which led to the conclusion that the taxpayers “entered into the transaction with [the LLC] to purchase refined coal tax credits and other tax benefits, not to participate in a business in which [the LLC] would act as a producer of refined coal.”

While the approach taken by the IRS in the TAM focuses on whether taxpayers engaged in a prohibited purchase of tax benefits, as opposed to being participants in the LLC’s refined coal business, it may be premature to conclude that the IRS has moved away from its partnership-based analysis entirely. In the opening footnote to the TAM, the IRS notes that “[b]ecause we conclude that the [taxpayers] engaged in the prohibited purchase of tax benefits, we do not reach the issue posed to us of whether the [taxpayers] are bona fide partners in [the LLC], or whether [the LLC] is a bona fide partnership.” Moreover, much of the IRS’s discussion of the factors that led it to conclude that the taxpayers had purchased tax benefits rather than participated in a refined coal business is based on the same factors that it has relied on in its prior partnership-based analyses.

It does seem, though, that the IRS is moving toward an analysis in which direct or indirect participation in the coal refining business is a significant factor in determining eligibility for the credit. This is at least suggested by the IRS’s observation that “[i]t is important to note that we do not take the position that investors must have the potential for a pre-tax profit from the refining activity in order to claim the credit.” An investor’s potential for pre-tax profit was a prominent feature of many of the IRS’s partnership-based analyses. Instead, the IRS seems to be saying, the key factor is “a meaningful stake in the success or failure of the activity apart from the tax benefits.” In the TAM, this approach led the IRS to conclude that the taxpayers had only a “limited likelihood of any meaningful variation in financial return from the underlying coal refining activity,” and “[a]s a consequence, it is more accurate to characterize [the taxpayers] as merely observers of an activity engaged in by others.” Accordingly, the IRS determined that the taxpayers are not entitled to the claimed refined coal credits.

Practice Point: The IRS has been struggling with the tax ramifications of refined coal transactions. As in other areas of tax law, the IRS’s position on individual cases seems to fly in the face of congressional intent: to encourage the development and use of emissions-reducing coal technologies by creating incentives for investment in such technologies. Here, the IRS ruled that the two taxpayers were not entitled to the claimed credits because it concluded that they had no real economic interest in the transaction, but it appears possible to structure such transactions to provide participants with a level of economic interest that would satisfy the IRS.

]]>http://www.energybusinesslaw.com/2017/07/articles/renewables/irs-rules-again-that-taxpayers-are-not-entitled-to-claimed-refined-coal-credits/feed/0http://www.energybusinesslaw.com/2017/07/articles/renewables/irs-rules-again-that-taxpayers-are-not-entitled-to-claimed-refined-coal-credits/Massachusetts Sets Energy Storage Targethttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/LlmHNS6HcRU/
http://www.energybusinesslaw.com/2017/07/articles/project-development-and-finance/massachusetts-sets-energy-storage-target/#respondMon, 10 Jul 2017 19:42:12 +0000http://www.energybusinesslaw.com/?p=1581Continue Reading]]>On June 30, 2017, the Massachusetts Department of Energy Resources (DOER) announced that Massachusetts would adopt an aspirational 200 megawatt-hour (MWh) energy storage target to be achieved by January 1, 2020. The target is the second largest in the nation, although it is far lower than California’s 1.3 gigawatt storage mandate. Still, Massachusetts’ storage target will make the commonwealth a leader in the burgeoning energy storage field.

The process of setting storage targets began last summer, when Massachusetts enacted a law directing DOER to determine whether to set targets for electric companies to procure energy storage systems by January 1, 2020. In September 2016, Massachusetts released a report called the “State of Charge,” which recommended the installation of 600 megawatts (MW) of energy storage by 2025. The report predicted that 600 MW of storage could capture $800 million in system benefits to Massachusetts ratepayers. The energy storage industry praised the 600 MW level as a good starting point.

DOER’s “aspirational” 200 MWh by 2020 target falls short of the “State of Charge” recommendation, but leaves the door open to achieving 600 MW by 2025. DOER’s letter announcing the target noted that “[s]torage procured under this target will serve as a crucial demonstration phase” for Massachusetts to gain knowledge and experience with storage. “Based on lessons learned from this initial target,” the letter continues, “DOER may determine whether to set additional procurement targets beyond January 1, 2020.”

Beyond DOER’s storage target, Massachusetts has a broader Energy Storage Initiative, which includes a $10 million grant program aimed at piloting energy storage use cases and business models in order to increase commercialization and deployment of storage technologies. DOER also announced that it will examine the benefits of amending the Alternative Portfolio Standards, an incentive program for installing alternative energy systems, to expand the eligibility of energy storage technologies able to participate. While Massachusetts’ storage targets are not as lofty as some in the industry were hoping, the commonwealth is demonstrating a clear commitment to developing its energy storage industry beyond the few megawatts currently installed.

]]>http://www.energybusinesslaw.com/2017/07/articles/project-development-and-finance/massachusetts-sets-energy-storage-target/feed/0http://www.energybusinesslaw.com/2017/07/articles/project-development-and-finance/massachusetts-sets-energy-storage-target/Analysis of Energy and Tax Proposals in the 2018 Budget Proposalhttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/rLrzhkSc0jE/
http://www.energybusinesslaw.com/2017/05/articles/project-development-and-finance/analysis-of-energy-and-tax-proposals-in-the-2018-budget-proposal/#respondThu, 25 May 2017 19:27:12 +0000http://www.energybusinesslaw.com/?p=1579Continue Reading]]>President Trump released his budget proposal for the 2018 FY on May 23, 2017, expanding on the budget blueprint he released in March. The budget proposal and blueprint reiterate the President’s tax reform proposals to lower the business tax rate and to eliminate special interest tax breaks. They also provide for significant changes in energy policy including: restarting the Yucca Mountain nuclear waste repository, reinstating collection of the Nuclear Waste Fund fee and eliminating DOE research and development programs.

]]>http://www.energybusinesslaw.com/2017/05/articles/project-development-and-finance/analysis-of-energy-and-tax-proposals-in-the-2018-budget-proposal/feed/0http://www.energybusinesslaw.com/2017/05/articles/project-development-and-finance/analysis-of-energy-and-tax-proposals-in-the-2018-budget-proposal/Maryland Likely to Become First State to Adopt Energy Storage Tax Credithttp://feeds.lexblog.com/~r/EnergyBusinessLaw/~3/3v0EO3SNry4/
http://www.energybusinesslaw.com/2017/05/articles/renewables/maryland-likely-to-become-first-state-to-adopt-energy-storage-tax-credit/#respondWed, 03 May 2017 13:57:19 +0000http://www.energybusinesslaw.com/?p=1574Continue Reading]]>UPDATE:This bill was signed into Maryland law on May 4, 2017 with a $75,000 maximum credit for commercial systems. A previous version of the bill offered credits to commercial systems up to $150,000.

In April, the Maryland legislature passed a bill creating a state income tax credit for the costs associate with installing an energy storage system. Governor Larry Hogan is expected to sign it into law. Unlike measures in other states such as California and Massachusetts, the Maryland bill does not contain mandated amounts of energy storage that utilities must procure. Instead, if the current bill is signed, Maryland will be the first state in the country to incentivize the deployment of energy storage systems by offering a tax credit. Presently, an energy storage system can qualify for the federal investment tax credit if it is installed alongside a solar photovoltaic system. This is the first ever tax credit for storage-only projects, although qualified energy storage systems still may be paired with renewable energy projects.

Under the terms of the bill, a taxpayer will receive a credit equal to 30 percent of the installed costs of the system, not to exceed $5,000 for a residential system or $150,000 for a commercial system. The incentive program has a funding cap of $750,000 per year, and applications for the credit will be approved on a first-come, first-served basis. Additionally, the tax credit may not be carried over for use in future tax years. The tax credit is currently slated to run from 2018 to 2022.

Maryland’s tax credit will not be limited to battery storage systems, although it may be used on widely available battery storage systems like the Tesla Powerwall. The bill will also cover energy storage systems that use other forms of energy storage, such as flywheels and compressed air storage.

The Maryland Energy Administration completed a study in January 2016 summarizing various considerations for energy storage in Maryland. As detailed in the study, energy storage can have a wide variety of uses, and systems are often capable of performing multiple services. Energy storage facilities can provide power and ancillary services to support the transmission grid, relieve congested areas of the transmission system and provide backup power in case of emergencies. Energy storage can also help integrate renewable energy technologies by storing excess electricity and discharging it at times when the renewable resource cannot generate.

Even though Maryland’s proposed tax credit has a relatively low cap, it will launch Maryland to the forefront of energy storage. Hawaii is currently considering an energy storage tax and could soon follow Maryland’s example.